Partnership and Corporation Practice Exam 2026 - Free Practice Questions and Study Guide

A private corporation officially starts to exist as a legal entity when the SEC issues its certificate of incorporation under its seal. This certificate is a formal declaration that the corporation has been legally formed in accordance with applicable laws and regulations. Until this certificate is issued, the corporation does not have the legal status to conduct business or enter into contracts in its own name.

The process of creating a corporation includes several important steps, such as signing the Articles of Incorporation and submitting them, along with the by-laws, to the SEC. However, these actions alone do not confer legal status. The act of the SEC issuing the certificate of incorporation is what validates those preliminary steps and formally establishes the corporation as a legal entity recognized by the state. Without this certificate, the corporation may face challenges in asserting its rights and privileges, such as limited liability for its shareholders and the ability to sue or be sued.

Therefore, the key moment marking the official existence of a private corporation is the issuance of the certificate of incorporation by the regulatory authority.